The Miami area has become, over the last few weeks, the most exciting potential casino development in the US. Massachusetts, it seems, has taken a backseat. Las Vegas Sands, Wynn Resorts, and Genting (who own Genting Highlands in Malaysia, Resorts World in Singapore, and are about to open at Aqueduct in New York) are seen as the frontrunners for gaming licenses, with MGM Resorts and Caesars Entertainment circling in the background.

As part of its pitch, Genting has said that it might build the world's biggest casino. But is that going to be the best fit for Miami? Or the best business model? After the jump, I'll compare casino square footage and break it down.

First of all, let's talk Resorts World Miami. There are apparently two different plans floating around. The Miami Herald has details about a $3.8 billion, 6 tower, 5,200 room resort with 800,000 square feet of casino space divided into 550,000 square-foot and 250,000 square-foot locations.

But according to the Sun-Sentinel, the casino will be much smaller. Even though, going by its proposed 10 million square-foot footprint for the entire resort, Genting would be statutorily permitted to build 1 million square feet of casino space, it's "only" planning for a total of 451,000 square feet--234,000 for regular joes and janes and 217,000 for "VIPs."

Even going by the lower estimate, that's a huge casino. Does it make sense? Steve Wynn has famously said that bigger isn't better, better is better. Let's take a look at a few Las Vegas Strip casino sizes so you can be the judge.

The average among Las Vegas Strip casino earning more than $72 million in gaming revenues in fiscal 2011 was 107,834 square feet.

It's ironic that the man who said "bigger isn't better" actually built the biggest casino floor on the Las Vegas Strip.

But does it feel like the biggest casino on the Strip? For my money, MGM Grand feels much bigger and more exhausting to walk through. Similarly, Wynn just feels a lot easier to get around than the Riviera, even though it's slightly larger. So while size might matter, good design is far more important.

But what would an 800,000-square foot casino look like? About the size of Bellagio, Mandalay Bay, MGM Grand, Caesars Palace, Wynn Las Vegas, and The Mirage combined. Under one roof (or two).

Even the 451,000 square-foot casino is immense--about the size of Bellagio, Mandalay Bay, and MGM Grand put together.

How walkable is that going to be? I'm going to resist making a retirees/South Florida crack here, but it's well known that many casino patrons are older folks who may have mobility issues. How inviting is such a massive casino going to be for them?

Foxwoods casino is 344,000 square feet, which is about the size of Bellagio and Mandalay Bay combined. I've never heard anyone say it's easy to get around. Now imagine more than doubling that, and you've got an idea of the scale of what Genting (might be) proposing.

Obviously the larger your casino, the more gaming positions (slots plus tables) you can have in it. The more positions, the greater the potential revenue. Adding more games brings definite economies of scale, as your costs for things like marketing and promotions (to say nothing of construction) are spread across a broader base of positions.

But at some point economies of scale become diseconomies of scale: the casino just gets too big for comfort. Design has a great deal to do with it--remember the Riviera vs. Wynn--but there's only so much design can do. I'm genuinely struggling with the idea of an 800,000 square-foot casino being a fun place to visit.

And this shows why it's not a good idea to impose artificial caps on licenses. To do so creates an invitation to corrupt the bidding/licensing process for one (look at Illinois and Louisiana for proof) and, in this case, encourages companies to submit designs that, at the very least, stretch the boundaries of what the market has historically tolerated.

If the state of Florida believes it's OK for its citizens to play casino games, why not just create a regulatory framework, set zones where casino development is permitted, and let the market sort it out? That way, you'll get the best mix of developers trying to get into the market, and by not having an all-or-nothing approach, they'll start by building projects that are actually workable and ramp them up as their revenues grow or as the market demands. Comparing a few projects on the Las Vegas Strip is instructive: Wynn Resorts started with its eponymous casino, then added Encore, then, when the market changed, pulled the plug on redeveloping the golf course. By contrast, MGM's insistence that all of CityCenter had to be finished at the same time didn't work out so well: the company is stuck with an inventory of condos it will likely never sell for what it once projected, and one important element of the project (Harmon) is possibly going to be demolished before welcoming a single guest.

From the player's perspective, it makes sense to think that a market with more options is going to give you a better deal. The general impression is that the Strip, from a competitive standpoint, is worse off thanks to the 2000-2005 consolidations. I would guess that with only three games in town, both marketing offers and casino odds would be less favorable to the player.

The key to successful casino development is treating it by the same rules as any other business. State-mandated license caps are good for the politicians, who get to auction off the licenses at a premium, and they're great for the lucky winners, but they don't really serve the industry as a whole, casino patrons, or the general public that well.

Comments

Great post. I agree that MGM Grand's casino looks and "feels" much larger than Bellagio's. Venetian's casino has also felt larger to me than Bellagio's. Steve Wynn designed his gaming floors as intimate spaces regardless of the square footage.

I can't believe Genting would have 800,000 sq ft of gaming floor as the Miami Herald said. One story said the 250,000 sq ft casino would be in a separate building and would be the VIP casino. No one needs a VIP casino that size. When the dust settles, I bet that none of the South Florida casinos will be larger than 150,000 to 200,000 sq ft.

Sen. Ellyn Bogdanoff, one of the sponsors of the Florida Bill said it's designed to start a dilaogue about the future of gaming in Florida. I hope someone listens to you and lets the market sort it all out.. There's got to be fairness for the existing racinos to be able to compete, and the Seminoles aren't going to go away. Since they're allowed to have the same games as commercial casinos, I'm sure they'll welcome the addition of craps and roulette. Three casinos in Miami and Broward counties won't affect the Seminole Hard Rocks in Hollywood and Tampa, and the expanding Coconut Creek Casino will draw customers from both Palm Beach County and western Broward. Then, if the highway from Fort Myers to Immokalee is ever improved, the Seminoles will build a Hard Rock type casino with hotel there to serve Naples, Fort Myers and Cape Coral. When the Seminoles were lobbying for the Compact, they talked about a 1,500 rooom hotel at Coconut Creek and a large hotel at Immokalee. I believe both are coming and won't be affected by what happens in Miami. This site was used to lobby for the Compact, but I expect the Seminoles to build a hotel within a year at Coconut Creek. http://jobsforflorida.com/files/ITF_iconic4.php

At the end of the day, Genting's project will probably approximate Venentian/Palazzo plus Sands Convention Center, and the others will be similar.

I'm a Florida retiree, and although I have no mobility issues, it's a hassle to drive to and in Miami. I'd be happiest if CET buys Gulfstream Park and the Village at Gulfstream and expands it. It's a great location for both north Miami and south Broward. http://www.thevillageatgulfstreampark.com/

October 27, 2011 8:01 PM
Posted by bigdaddyj

The only sort of statutory size requirement regarding development of casinos that ever made sense to me (at least in theory) was what Atlantic City did originally, which was to require that to have a casino you also had to have at least a 500 room hotel, in order to spur (re)development and attempt to create a large enough base of hotel rooms to attract overnight visitors and (presumably) conventions. Of course, we all know how well that worked out for Atlantic city, so its arguable that these types of limitations really don't help spur development in the way they're intended, even if those intentions are (or were) good...

I've been to Foxwoods many times, and no, it is not an easy place to get around at all. It is very easy to get lost in there.

Also, as an east coaster (Philadelphia 'burbs) who still visits Las Vegas, I'm skeptical whether or not Vegas-style gaming in Florida will take off, and think it may turn out to be somewhat of a bust, for several reasons. First of all, the East coast is now saturated with local casinos. And almost anyone who wants to visit Florida from the northeast can & already does visit Florida whenever they want, so I don't know if having a big casino down there is going to draw any additional domestic visitors; maybe Europeans and South Americans, who knows. But unless enough casinos are developed to compete with Las Vegas in terms of number and diversity of offers, would a new Miami mega casino really draw a lot of new visitors? After all, if East coasters, Europeans & South Americans want to gamble in the tropics, Puerto Rico has had casinos for decades. There's already Atlantis in the Bahamas. I'm pretty sure there's gambling on other caribbean islands, and I don't know, but I'd guess there's probably at least somewhere in South America you can gamble, if not many places. So does building mega casino-resorts in Miami really offer all that much in terms of creating a new market or serving an underserved one? After all, its not like the Miami area (or Southeastern Florida in general) suffers from a dearth of large-scale luxury hotels and resorts as it is...perhaps legalized gambling in Florida would make more sense in providing local casinos for the old folks, not investing billions in mega resorts that might not attract the crowds the developers are expecting...

The original business model for Atlantic City (and to a lesser extent Las Vegas) worked best when gambling wasn't something most of the country could do within a half-hours drive. The Northeastern US is now saturated with casinos, beyond just rinky-dink "locals" casinos; some of them, like Foxwoods & Mohegan Sun, Borgata, French Lick (to name just a few) are already full scale resort experiences already. We all see what the proliferation of domestic legalized gambling has done to Atlantic City, and the looming threat of what it and the growth of Macau, Singapore, and other international markets might indeed be doing to Las Vegas as well; is diluting the market with yet another epicenter for large-scale resort based casino gambling really such a good idea, or is it just cutting an already fully-baked pie into smaller and smaller slices? Or is it going to turn out like City Center - a huge investment of capital resulting in a questionable return? I guess we'll find out...

That being said, let me backtrack to what I started saying about being an east coaster who still chooses to visit las vegas, which is that I don't like Florida! I've spent a lot of time there (my parents had a winter home in the equestrian-oriented community of Wellington (west of West Palm Beach) when I was growing up) growing up, and I'm not a fan of humidity, so one of the reasons I like to visit Vegas is the desert climate & scenery, though what really still pulls me to Vegas is just the sheer diversity of offerings in terms of hotels, great restaurants, etc...so for me personally, resort casinos in Miami wouldn't pull me away from Vegas. If I wanted to gamble in the tropics, I'd go to Puerto Rico. So when they talk about siphoning off gamblers from Las Vegas with a shorter flight, or creating a new market where there wasn't one before, I have to argue, as a "premium" gambler from the northeast, aren't I presumably the type of person they're hoping is going to patronize these Miami casinos? They'd have to build something really spectacular down there to make me want to put up with all the things I hate about Florida to get me down there, and I have a feeling I'm not the only one who feels this way...at the most, all I see them doing is cannibalizing the people who already gamble in Puerto Rico, or on cruises, and to a certain extent, some people who do go to Vegas. But I could be wrong...

Okay, I realize I'm all over the map here, just thinking as I'm typing, so I'll stop rambling now...

October 28, 2011 3:39 AM
Posted by Jeff in OKC

With gambling and resorts in the carribean, plus tribal gaming and Atlantic City, I don't see Miami as a big threat to Las Vgas. There might be a bump for the first quarter, but I think people west of Atlanta will still see Las Vegas as THE City.

October 28, 2011 3:47 AM
Posted by detroit1051

It's going to be interesting to watch Genting's performance at Resorts World New York which opens today. It's certainly not anything close to what's planned for Miami, but we'll see how good an operator they are in the U.S.

Bigdaddyj, I love Florida. Maybe I'm a stereotypical Floridian because I'm much older than you, but at this time in my life, I can't imagine living anywhere else. Maybe it was 60+ years of never seeing the sun from November to May in Detroit.
Btw, your parents must have been in Glenn Straub's development?

Great stuff, I'm shocked that Riviera's casino floor is that large, I would have put it down as one of the smaller floors on the strip. Although in it's case, I think the feeling of 'small' doesn't equal 'intimacy'. I would also agree that the Bellagio floor is better laid out then MGM and feels smaller then MGM.

I've seen some of the Twitter discussion with you on Florida casinos. I do believe it has the potential to be the one market that could seriously injure Las Vegas. AC was always billed as the east coast alternative, but as has been pointed out accessibility for much of the East coast sucks for AC. Florida doesn't have that problem, and flights are more accessible, available, and cheaper. Add in what could be considered better weather and Las Vegas could have serious issues, as there mid-high roller class that typically comes in once a month or so, can just do their weekends down in Florida.

Thankfully for Las Vegas, it appears that Florida's going to build casinos in the same way the rest of the country has, which is built on the premise of using them as tax revenue, rather then have any concern over their prosperity or ability to integrate into the city and allow them to grow through means like competition and investment.

Last point, and coming back to the Twitter discussion, your point was that LV needs to continue focusing on the amenities it's been bringing to market in the last 5-10 years, and I do think it's their best course to compete with whatever Florida brings to market. They shouldn't have to worry much though, as it doesn't appear that Florida's government is going to get out of it's own way.

Las Vegas has a greater density of casinos than any other US market besides (arguably) Atlantic City. There's just more for casino-minded folks to do here.

That's a strength Vegas needs to continue to build on.

October 28, 2011 1:20 PM
Posted by briguyx

MGM Grand feels so long because it's rectangular rather than square and you have to walk through the whole thing every time you want to go to your room!

Having been to the Hard Rock in Fort Lauderdale, it's a pretty long drive to get there from the coast with no freeway available. If the Miami casino is centrally located, it could certainly pull people away from the Hard Rock.

October 28, 2011 1:50 PM
Posted by jonasjones

Great article and interesting conversation.
Personally, I'd love to see this built. Although, I echo the skepticism of other posts. I wonder what the casino square footage is of Genting Malaysia?
I was also surprised MGM isn't the largest... Walking from the strip to your room seems like miles.

October 28, 2011 7:17 PM
Posted by detroit1051

Briguyx, you're right. Seminole Hard Rock is in a lousy location on reservation land surrounded by pawn shops, tool & die companies, etc. It does border the Florida Turnpike. Several years ago, the Seminoles told Florida they would pay a large percentage of the cost of a Turnpike exit ramp on Stirling Road next to the casino, but the state declined the offer. Seminole Paradise's clubs generate a lot of traffic as does Hard Rock Live which has concerts/shows every week during season. Regional and tribal casinos are the best thing that ever happened to "has been" entertainers. Some of the concerts are excellent.http://www.hardrocklivehollywoodfl.com/

October 28, 2011 11:04 PM
Posted by bigdaddyj

@detroit - yes, my parents had a home in the PBPCC from 1985-1994.

Also, I totally understand your love of Florida, I was just stream-of-consciousness rambling about the ideas of casinos in Florida and the fact that I prefer the desert to the tropics, so for me, as an east coast gambler, it would still be more worth it to take that 5-and-a-half hour flight to Nevada over the 2-and-a-half hour flight to Florida...

October 29, 2011 12:16 AM
Posted by Mungroo

Dave: The Grand Lisboa in Macau may be around 400,000 - 500,000 square feet. It was the largest casino floor I had ever seen, then I went up an escalator and there was another casino floor of identical size.

Venetian Macau may be on the same scale.

October 29, 2011 4:29 AM
Posted by Jeff in OKC

The WinStar Casino (an hour north of Dallas at the state line) is 519,000 sf. Built out of cash flow, in 5 or more stages, it doesn't feel as big as MGM Grand (I guess that's a compliment to one of them). But it's big. I mean Texas sized BIG! It's damned exhausting just walking back and forth a couple times. Traffic and parking isn't bad because the Chickasaw tribe owns everyting around it for a few miles and they paid for good hiway exits. Plus the hotel is only 400 rooms.
I can't imagine something over twice that size (including several thousand more hotel rooms) being stuck in an already dense area of Miami without traffic being a nightmare. Wouldn't it be like going to the Orange Bowl 24/7?

October 30, 2011 10:24 PM
Posted by baccarat_guy

Jeff in OKC,
are you certain the casino floorspace at WinStar is that large? That would make it larger than Foxwoods and Mohegan Sun; which I always thought were the #1 and #2 largest casinos in the country.

I'll ask a buddy who is pretty connected with Chickasaw management. They added the east-west section in the last 2-3 years and it is, by far, the largest single expansion to date. That is the expansion that connected the north-south casino to the hotel. The current project is the multiple-level parking garage and new entertainment venue, which I think I heard is several thousand seats.
Guys, by far this is the closest casino to the Dallas-Fort Worth market. Which is one of the 10 biggest in the United States. The Chickasaws have, IMO, built on the cheap. Much of the casino has a canvas roof. They don't want to have too big a capital investment in case Texas legalizes casino gaming, but they want to milk as much as they can from the (so far) insatiable north Texas market.

November 3, 2011 11:32 AM
Posted by FoolsGold

The casino will undoubtedly include the various bars, stages, delis, foot courts, players desks, etc. One can always rip out something and add something else, but the trick is to play the construction loan card properly.